Have-not provinces holding oil hostage

By: Candice Malcolm 

Column originally published in the Toronto Sun on July 17, 2015. Original post can be found here: http://www.torontosun.com/2015/07/17/have-not-provinces-holding-oil-hostage    

Saskatchewan Premier Brad Wall isn’t a flashy guy. He comes across as humble and down-to-earth; the kind of person who would probably stop and help you fix a flat tire if you were stuck on the side of the road. That’s why polls consistently rank him the most popular premier in Canada.

Wall also knows how to stand up for what is right, and has the great ability to call a spade a spade.

These skills were on full display this week, as Wall went to bat for Canada’s energy workers at an annual meeting of the country's premiers. He articulately made the case for the Energy East pipeline, a new proposal to carry oil from Alberta to refineries in New Brunswick, converting 3,000 km of an existing natural gas pipeline and building another 1,200 km of new pipeline.

Ontario and Quebec announced their intention to impose new environmental demands on Alberta and Saskatchewan – the price for their support for this project to go ahead.

Wall was clearly frustrated by the lack of support for Western Canada’s economy, so he came out swinging against the premiers of Ontario and Quebec.

Premier Wall even quipped that perhaps Western Canada needs to pump Equalization payments through a pipeline, in order to finally get central Canadian politicians to approve one.

Zing.

Wall hit the nail on the head, not once, but twice. In one fell swoop; he criticized both Canada’s inter-provincial trade barriers and our country’s failed Equalization system.

Plainly and simply, Canada’s have-not provinces cannot simultaneously shut down Canada’s energy industry while also demanding cash payments from the provinces that produce oil and gas.

If Canada’s have-not provinces want equalization payments, they need to understand that much of that cash comes from Canadians working in the energy sector.

The last thing Canada’s economy needs right now is provincial premiers presiding over regional fiefdoms and trying to shake down their neighbours - their fellow Canadians – who are simply trying to get their products to market.

Premiers Kathleen Wynne and Phillipe Couillard seem willing to hold the energy industry hostage, putting our entire economy at risk. At the same time, they have the gall to turn around and demand the federal government take even more money out of Western Canada to pay for their pet projects in Toronto and Montreal.

Ironically, Quebec ranks third in oil and gas sector spin-off jobs in Canada; tens of thousands of Quebecers work in jobs related to the energy industry.

And thanks to an elaborate scheme of federal transfers including equalization, health transfers, social transfers, infrastructure funding and other subsidies, the Government of Quebec gets more than 20 per cent of its annual revenue - $20.4 billion this year alone – in transfer payments from the federal government.

Ontario is not far behind. Thanks to over a decade of spendthrift politicians and fiscal mismanagement, Ontario is giving Quebec a run for its equalization money. Ontario is now the second largest recipient of equalization transfers, receiving $2.4 billion in equalization transfers and $20.5 billion in total transfers from the feds.

And still, the Wynne government complains they are getting the short end of the stick on federal transfers. They bury their shame, cry foul and blame the Harper government for their budget woes.

Equalization was created out of a well-intended wish for each province to achieve equal service levels despite income (and management) disparities across the provinces.

It has degraded, however, into the politics of division, where the federal government plays Robin Hood with our tax dollars. The problem, of course, is that mismanaged provinces have no incentive to clean up their act, so long as their bad fiscal behaviour is rewarded with cash from the well performing provinces.

Stephen Harper used to believe in reforming equalization. Back in 2001, Harper wrote a scathing letter over the transfer systems, denouncing the undue burden placed on Canadians through high taxes and heavy-handed transfers.

But when finally given the opportunity to reform the system, Harper took a pass. His government dropped the ball in 2014 when the equalization agreement came up for renegotiation, and now Canada is stuck with a two-tiered system of ‘haves’ and ‘have-nots.’

Equalization punishes provinces with low taxes that promote economic prosperity, and rewards provinces with wasteful government spending, chronic debt, and sluggish economies.

That is why Brad Wall’s comments are so refreshing. He is one of the only politicians in Canada willing to stand up for Western Canada’s oil and gas workers. He’s also one of the few willing to the truth about equalization.